Joseph Perkins: Sports stadiums sideline taxpayers

Those were the irrationally exuberant words of Sacramento City Councilman Steve Hansen following the council's decision this week to publicly finance much of the cost of a new home for the city's NBA franchise.

It stands to reason that if Mssrs. Ranadive, Mastrov, Burkle and Jacobs are as bullish on California's capital city as Hansen suggests, if they think it a great idea to build a $448 million tricked-out arena for the Sacramento Kings, they could easily pay for it themselves.

Instead, Sacramento taxpayers are on the hook for $258 million of the arena's price tag, according to the "term sheet" approved by Hansen and his council colleagues.

And watchdog group Eye of Sacramento estimates that, when all is said and done, the public subsidy actually will amount to $334 million.

Over the past two decades, more than 100 sports facilities around the country have been built on the public dime to accommodate privately owned NBA, NHL, MLB and NFL franchises.

Now, if public funding of those arenas and ballparks and stadiums generated tax revenues in excess of the subsidies, then deals cut by cities like Sacramento would be economically defensible.

But that rarely is the case, according to Judith Grant Long, a Harvard University associate professor of urban planning, and author of the 2012 book, "Public/Private Partnerships for Major League Sports Facilities" (watch out, its sticker price might even make an NBA owner blink).

The "burgeoning number of public finance crises with roots in sports facility deals," wrote Long, "points to a clear need for better understanding of the long-term risks and implications for taxpayers."

Yet, she continued, "this kind of long-term financial analysis has been absent from much of the public discourse associated with the latest rounds of subsidies for major league sports facilities."

Her extremely well-documented book cites several recent examples that should provide cautionary tales for cities like Sacramento.

In 2010, Hamilton County, Ohio was unable to make a $27 million annual bond payment on Great American Ballpark – home to the Cincinnati Reds – and Paul Brown Stadium – home to the Cincinnati Bengals.

The bonds were supposed to be repaid through a half-cents sales tax increase; however, revenues proved to be lower than forecasted.

Harris County, Texas relied on revenues from both hotel/motel taxes and car rental taxes to pay debt service on Minute Maid Park – home to the Houston Astros – Reliant Stadium – home to the Houston Texans – and Toyota Center Arena – home to the Houston Rockets.

When revenues dipped 12 percent in 2009, the county had trouble paying for its three sports facilities, which resulted in a lowering of its bond rating in 2010.

Then there's Orlando, which faced a financial crisis in 2010 when the bonds it used for its new Amway Center Arena, which were to be paid for by an increase in the city's tourism development tax, were downgraded to junk status, with a default warning issued last year.

And local governments in 2013 continue to pay for unwise deci- sions to help bankroll new major league sports facilities.

Just this week, in fact, Miami Mayor Tomas Regalado decried the city's $409 million subsidy of Marlins Park, which has saddled Dade County, Fla. and the city of Miami with $2.6 billion in long-term debt.

"Miami has a history of bad deals," said Regalado, "But I would rate this Number 1. The residents of Miami were raped. Completely."

Meanwhile, despite ample evidence that sports facilities rarely pencil out for municipal governments, despite the firsthand testimony of civic officials around the country, like Mayor Regalado, Sacramento's elected officials are quite willing to give away hundreds of millions of tax dollars to billionaires who don't need it.

That's because Sacramento Mayor Kevin Johnson – who happens to be a former NBA player – and his city council are afraid their NBA club is going to steal away to Seattle – which lost its own NBA franchise, the Supersonics, to Oklahoma City in 2008.

Indeed, city leaders in Seattle are bummed about Sacramento's arena deal, as KHQ-TV in sympathetic Spokane reported this week. "Disappointing News For Return Of Seattle Supersonics," lamented a headline appearing on its website.

Frankly, the Emerald City's 620,000-something residents should celebrate the increasing likelihood that the Kings will remain in Sactown.

That's because the deal their elected officials cut with billionaire Microsoft CEO Steve Ballmer and hedge fund manager Chris Hansen – prospective owners of Seattle's new NBA franchise – will cost them $200 million towards – you guessed it – a new publicly subsidized basketball arena.

Local governments need to stop getting played by billionaire owners of professional sports franchises.

If the new arenas and ballparks and stadiums they ask for were good investments, they wouldn't think about letting cities and counties get a piece of the action.